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  • Board Diversity: Why It Really Matters.

Board Diversity: Why It Really Matters

By Josephine Victoria Yam, J.D., LLM.

2016 July 1

As a female lawyer who is Asian and a visible minority, I have always been an active advocate for diversity in the workplace. As I practiced law and held leadership positions in various sectors, I often observed that I was either the only woman, the only Asian or even the only visible minority — whether in a boardroom, a business lunch meeting or a workshop. From where I stood, leadership positions in the private, government and nonprofit sectors were more often held by more males than females, more older people than younger ones, more white people than people of colour.

Interestingly, my observations were more pervasive than I initially imagined.

Canada has the second largest and most robust charitable and nonprofit sector in the world. According to Imagine Canada, 2 million Canadians are employed in the sector and over 13 million Canadian volunteer for the sector. The sector provides about 8.1% of total Canadian GDP, which is more than what the retail sector contributes and almost equal to what the oil and gas and mining sectors contribute. Most nonprofits involve volunteers including those at the board leadership level.

What do mean when we speak of diversity? In its “The Value of Diverse Leadership” report, the Conference Board of Canada explains that diversity includes, without limitation, a spectrum of human qualities such as gender, ethnicity, race, colour, age and sexual orientation.

According to the Diversity in Governance report, in 2010, Ontario’s nonprofit sector had 386,000 volunteer board members. However, only 11.9% were visible minorities as juxtaposed to 49.5% visible minorities comprising the entire Ontario population. Also, only 28.6% of the charities and 33.3% of the foundations surveyed had boards that were all white, with no visible minorities whatsoever sitting on their boards.

Similarly, in a 2005 study of Alberta ’s nonprofit sector, only 5% of senior management positions were held by visible minorities as compared to 11% visible minorities comprising the province’s population.

Even in the U.S., nonprofit board diversity falls short. According to Boardsource’s 2015 Nonprofit Governance Index “Leading with Intent”, people of colour only comprise 20% of nonprofit boards while 25% of nonprofit boards remain all white. Moreover, only 37% of large organizations (with at least $5 million operating budgets) have female CEOs. Board members under 40 years old comprise only 17% of board membership. Here’s where it gets really interesting: 45% of boards and 69% of CEOs are dissatisfied with their board diversity on race and ethnicity — and yet, 71% of boards and 75% of CEOs view such diversity as fundamental to advancing their nonprofits’ missions.

The diversity gap in nonprofit boards is undoubtedly a wasted opportunity. Why? Because a nonprofit board is the brains behind every nonprofit organization. This team of volunteer leaders wields the authority and influence to drive a nonprofit’s strategic direction, effective performance and social impacts.

As the Conference Board of Canada notes:

“When leadership is diverse, the range of talents and perspectives broadens—bringing a wider array of knowledge, skills, and experiences to an organization. Diverse leaders bring fresh perspectives, market knowledge, creative thinking, and capacity for risk-taking (‘know-how’), and often attract new investors and skilled workers (‘know-who’). Ultimately, their contribution is to improve the financial performance and effectiveness of the organizations they lead, and to strengthen the communities in which they are active. There is a symbiotic relationship between the perspectives and outcomes created by diverse leadership, improving organizational effectiveness."

Several reasons are cited for why board diversity makes good business sense in both the corporate and nonprofit sectors:

 
Board diversity provides diverse perspectives in decision-making producing better decisions
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Board diversity helps legitimize an organization’s mission and vision
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Board diversity helps build social capital and cohesion among diverse populations
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Board diversity creates a more diverse organization that is more responsive to the community and clients
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Board diversity supports more productive fundraising, marketing & communications outreach initiatives
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One study that examined 112 large U.S. companies discovered that ethnic and gender diversity on boards produced greater diversity of perspectives. This in turn led to “constructive conflict” that engendered more comprehensive discussions that led to more effective strategic decisions. The study highlighted that diverse leadership is positively correlated with improved organizational performance.

Today, July 1, 2016, we celebrate ‘Canada Day’. On this day, we also are pleased to launch B3 Canada, our mission-driven organization focused on building breakthrough boards for Canadian nonprofits though board diversity. We promote board diversity by providing an innovative board matching service that facilitates business-nonprofit partnerships across Canada.

Board diversity strengthens leadership.

As Jacqueline Woodson so eloquently expressed:

“Diversity is about all of us, and about us having to figure out how to walk through this world together”.

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